What You Need to Know
- Savita Subramanian, the bank's U.S. head of equity, has lifted her target to 5,400, citing unexpected earnings strength.
- However, she sees risk of a near-term pullback on growing bullish sentiment.
- Even bearish forecasters are acknowledging that the stock market looks stronger than they thought.
Bank of America Corp.’s Savita Subramanian is the latest equity strategist to ratchet up her target for the S&P 500 Index to among the highest on Wall Street after this year’s rally left forecasters blindsided.
Subramanian now expects the benchmark to end the year at 5,400, compared with her earlier target of 5,000 — implying a gain of about 5% from Friday’s close. Indicators are flashing bullish signals on stronger earnings growth ahead and “surprising” profit margin resilience, she said.
“Bull markets end with euphoria — we’re not there yet,” Subramanian, the bank’s head of US equity and quantitative strategy, wrote in a note to clients on Sunday. “Sentiment has improved, but areas of euphoria are limited.”
BofA’s 5,400 price target for the S&P 500 in 2024 now ranks as one of the most bullish on Wall Street, according to about two dozen sell-side strategists tracked by Bloomberg.
She joins the ranks of Ed Yardeni of Yardeni Research and Jonathan Golub of UBS Group AG, who both hold the same year-end outlook.
The artificial-intelligence frenzy has surprised Wall Street forecasters and spurred a race among strategists to keep up with a stock market rally that’s already blowing past their expectations. In recent weeks, Piper Sandler & Co., UBS and Barclays Plc have all boosted their targets.
Goldman Sachs Group Inc. and UBS have both already raised their outlooks twice since December, following the Federal Reserve’s dovish policy shift.
The S&P 500 closed above the significant 5,100 milestone on Friday for the first time in history, with the index already beating the average year-end forecast of 4,899.40.
What’s Driving the Index
Leading indicators argue for upside to BofA’s earnings-per-share forecast of $235, with the consensus’s $243 seeming like a “reasonable” expectation for stronger economic growth and higher profits, the firm’s strategists said.
The S&P 500 has climbed 7.7% to start the year after rising 24% in 2023. Fourth-quarter earnings season reaffirmed that corporate profits are improving. Out of the 98% of the benchmark’s market capitalization that have reported so far, 76% have beaten expectations.